State Auditor Mike Foley said an audit team found serious financial discrepancies in a program administered by the Nebraska Department of Health and Human Services, resulting in significant financial losses to Nebraska taxpayers.

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DHHS administers the Health Insurance Premium Payment Program, which is funded with millions in federal and state tax dollars. HIPP reimburses the cost of private health insurance coverage for qualified persons when such payments are found to be less costly than having the persons participate in the Medicaid program.

DHHS disregarded its own regulations in its management of HIPP, resulting in large payments to persons clearly ineligible or those whose eligibility could not be documented, the audit found. The auditors discovered DHHS made duplicate payments and approved obvious payment errors along with other financial discrepancies.

The audit team suspects possible fraud on the part of some individuals who received benefits through the program.

Foley says the program was overseen by a Department of Health and Human Services employee who was poorly trained and largely unsupervised.

“The shocking level of mismanagement, coupled with inattentive supervision, created a perfect storm, resulting in years of wasting large sums of taxpayer money,” said Foley.

The audit team said DHHS failed to complete a cost-benefit analysis for any of the more than 661 program participants. They said DHHS made no effort to determine if it was truly less costly to subsidize private health insurance coverage for these persons, as opposed to having any of them receive coverage through Medicaid.

The audit revealed within a 2.5 year period, DHHS spent more than $6.5 million on private health insurance coverage without confirming that it was cost-effective to do so for even a single participant.

In one case, DHHS paid more than $265,000 in private health insurance premiums when it would have been far less costly to have the person receive Medicaid coverage, the audit team said.

Department officials said they're taking steps to correct the problem.